Bitcoin Faces Potential Supply Shock Due to Saylor's Relentless Buying

Bitcoin’s supply is shrinking as 93% of all coins have been mined, leading to a potential supply shock. With long-term holders not moving their BTC, liquidity is drying up. Increasing demand from ETFs and institutions is tightening the market, potentially triggering sharp price moves.

Michael Saylor’s company, Strategy, now holds over 2.75% of all Bitcoin in existence and continues to aggressively accumulate more. This accumulation has raised concerns of a potential supply crisis on the horizon, limiting liquidity in the market for new entrants and retail traders.

Institutions are buying Bitcoin in bulk, with BlackRock’s iShares Bitcoin Trust seeing record inflows. Spot ETFs have opened new gateways for pension funds and banks to enter the market, pulling coins off exchanges and tightening supply. Companies like Trump Media Group and GameStop have also invested heavily in Bitcoin.

After the 2024 halving, Bitcoin’s inflation rate dropped below 1% annually. Concerns arise as a few whales, including Strategy, control a significant portion of all Bitcoin. Critics warn of ownership concentration, while others see it as a sign of confidence in holding for the long term.

A Bitcoin liquidity crisis may occur as exchange balances reach their lowest levels in years, leading to more volatile price swings. The share of Bitcoin on exchanges has dipped below 11% of the total supply, creating a “dry market” prone to larger price swings.

Bitcoin’s scarcity is being tested in real time as supply shrinks due to institutional hoarding and diminishing miner rewards. Whether this leads to a bullish supply shock or centralization concerns remains to be seen. The macro backdrop, including high interest rates and regulatory uncertainty, may impact Bitcoin’s role as a store of value compared to gold.

Read more at Cointelegraph: Will Saylor’s relentless BTC buying cause a supply shock?